Rory O’Connor, Founder and CEO of Scurri, examines the impact of the Northern Ireland Protocol on the retail sector in Ireland and Northern Ireland, particularly in terms of imports from the UK.
To say the retail sector has faced an uncertain and difficult last 18 months would be a gross understatement. Despite this, both grocery and delivery services prevailed. Uptake in delivery was unprecedented, while food shops and supermarkets were one of the few physical storefronts to not face closures.
Yet we have been faced with a new challenge since the signing of the Northern Ireland Protocol on January 1, 2021. The agreement had a clear objective, as it aimed to solve the issues relating to one of the most contentious aspects of Brexit. The unique economic, cultural, societal, political and historical considerations associated with Northern Ireland and the UK separated it from the regulations already put in place for Brexit trade with the EU. Just last week, former presidential candidate Hilary Clinton addressed the tensions over Brexit and the Protocol, highlighting the seriousness of the factors at play.
The prevention of a hard border, complying with all aspects of the Good Friday Agreement, led to the introduction of the Northern Ireland Protocol to ease trade barriers between Northern Ireland and Ireland. While the concept and efforts were notable, there is no escaping that this Protocol has created frustrations for retailers and suppliers across the UK, Northern Ireland and the Republic. Brussels is aiming to resolve all issues by the end of the year - but is this soon enough when examining our current situation? Issues regarding documentation and the introduction of tax declarations, VAT implications, and customs have led to delays and disruptions in shipments. Combined with the driver shortages across the UK, this does not paint a promising picture for trade at present and the situation looks to become only more complicated.
State of grace coming to an end?
As we approach the second scheduled date for the discontinuation of the grace period, this now coincides with the busiest period of the retail year, with Black Friday, Cyber Weekend and the Christmas shopping period all around the corner. Almost a year on from when this legislation was signed, the concerns felt by all have not ceased - instead they have reached consumers in the Irish market, worried that they will be unable to purchase certain items at this busy time.
The end of the grace period on September 30, though originally due to draw to a close months ago, was to arrive far too soon for many retailers and suppliers. The UK has announced that they will be extending the grace period, even though this goes against the rules laid out in the signed agreement. Boris Johnson has announced that the Protocol hugely compromises the UK and that the EU have been too rigid in their application of it. They wish to be rid of most checks and custom procedures and allow trade to flow more easily; however, this goes against what they had previously agreed to.
One group most impacted by this is the food and grocery business. EU food safety rules dictate that chilled meat products are not allowed to enter the single-market from non-EU countries, such as the UK following Brexit. The grace period has allowed this rule to not be implemented; however, the grace period will have to come to an end at some point. This would mean Irish grocers altering how they get meats delivered and failure to address this issue could mean certain products are missing from shelves for their consumers to buy.
Slump in food imports
Already, we have seen the presence of new barriers resulting in a slump in food imports into Ireland from Britain. Figures released by the Central Statistics Office showed that as we have seen imports to the Republic from Britain decrease, the largest decreases were in the imports of food, live animals, machinery and equipment. Uncertainty over when the grace period will come to an end only adds to this problem. Despite this, other statistics from the CSO have recently shown new dramatic patterns in the first half of this year and highlight that in spite of the confusion caused by the Protocol, trade has remained steady for the most part, with exports from the Republic to the North up to €1.576 billion from S1.1 billion the previous year.
While we are yet to see directly negative results in the Republic’s exports, many companies’ decision making has been impacted by concerns over the Protocol, and as a result, this has affected trade patterns. As the issue has so many heads, it is difficult for us to understand what is fully impacting the decisions being made. While Irish exports are currently strong, we can expect them to take a hit later this year when further restrictions are imposed but moreso, we can expect to see imports take a massive hit, especially at a time when this is less than ideal for retailers and consumers.
Recently it was revealed that goods imported to the Republic from Britain have fallen by a third as a result of Brexit - a decrease of S2.9 billion when compared to the same period in 2020. Popular grocery retailer Marks & Spencer cited post-Brexit regulations and excessive paperwork as the reason for this decrease.
Technology can help
The tech is available to aid in combating issues regarding these new trade barriers and cross border challenges with issues like currencies, payment methods, duties and tax calculations, site translation, traffic generation and multi-carrier delivery management. Despite these solutions, however, more challenges remain. Retailers that have responsive systems in place ahead of this will find themselves in the most flexible position when it comes to delivering cross border trade. However, companies that have failed to implement this, will find it challenging and lose out as a result - impacting their own business and overall trade.
Retailers must have tried and tested logistics in place to combat any complications that may arise in order to operate a successful business but moreover to ensure they have satisfied their customers. Ultimately, the biggest changes will be made through regulation, but delivery suppliers and retailers have the power to make this unconventional retail period as simple as possible.
About the author
Rory O’Connor is Founder and CEO of Scurri, a technology company who help their clients to knit together all the different parts of their online shipping and delivery process. Scurri offer a robust and reliable platform, the right carriers, real time tracking and reporting, and promise to answer your calls and fix your problems when you need them to. “Imagine delivery, without the hassle,” reveals Rory. “We help online retailers quickly, securely & accurately manage the shipping of their goods to their customers.” For more information, visit www.scurri.com.
Enjoyed this story? Subscribe to our newsletter and receive stories of interest straight to your inbox. Just click on the Sign Up button at the top your screen to stay in the loop.
